Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of music publisher Warner Music Group (NYSE: WMG) scored a hit today, jumping as much as 16% on tremendous trading volume.

So what: German media outlet Handelsblatt says that European music giant Bertelsmann and American buyout gurus Kohlberg Kravis Roberts & Co. (NYSE: KFN) are ready to buy Warner Music for as much as $3 billion. Before jumping to euphoric conclusions about the tripling of a $1 billion market cap, you need to adjust that value for a heavy debt load and lack of cash: Warner Music's enterprise value now stands at $2.5 billion, all things considered.

Now what: The German newspaper says that KKR and Bertelsmann would dump some of the company's assets after closing the deal and then focus on running a profitable music publishing business. Collecting royalties on the intellectual property of musical works is a high-margin business, while selling recorded music is a less attractive business even when using digital channels with low overhead such as the Amazon.com MP3 store or Apple iTunes. It's a brave new world for artists and composers, and consolidation of the big music studios is a natural coping mechanism.

Interested in more info on Warner Music Group? Add it to your watchlist.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Apple and Amazon.com are Motley Fool Stock Advisor selections. The Fool has written puts on Apple. Motley Fool Options has recommended a bull call spread position on Apple. The Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is investors writing for investors.